REG - Zotefoams PLC - Final Results <Origin Href="QuoteRef">ZTF.L</Origin> - Part 2
17/03/2015 07:01
- Part 2: For the preceding part double click ID:nRSQ5944Ha
(19)
Equity-settled share-based payments net of tax - - - - - - 75 75
Dividends paid 8 - - - - - - (2,112) (2,112)
Total transactions with owners of the Parent 199 4 8,250 - - - (2,056) 6,397
Balance at 2,191 (17) 24,340 15 827 (149) 20,027 47,234
31 December 2014
1. Accounting policies
Zotefoams plc (the 'Company') is a Company incorporated in Great Britain.
The Group financial statements consolidate those of the Company and its
subsidiaries (together referred to as the 'Group'). The Parent Company
financial statements present information about the Company as a separate
entity and not about its Group. The consolidated financial statements of
Zotefoams plc have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union and IFRS
Interpretations Committee (IFRS IC) interpretations applicable to companies
reporting under IFRS.
The financial information does not constitute the Company's statutory
accounts, as defined in Sections 434 of the Companies Act 2006, for the year
ended 31 December 2014 or 2013 but is derived from those accounts which have
been approved by the Board of Directors. Statutory accounts for 2013 have
been delivered to the Registrar of Companies, and those for 2014 will be
delivered following the Company's Annual General Meeting. The auditors have
reported on those accounts; their reports were unqualified and did not contain
statements under Section 498 (2) of the Companies Act 2006.
2. Segment reporting
The Group's operating segments are reported in a manner consistent with the
internal reporting provided to and regularly reviewed by the Managing
Director, David Stirling, who is considered to be the 'chief operating
decision maker' for the purpose of evaluating segment performance and
allocating resources.
The Group manufactures and sells high-performance foams and licenses related
technology for specialist markets worldwide. Zotefoams' activities are
categorised as follows:
· Polyolefins: these foams are made from olefinic homopolymer and
copolymer resin. The most common resin used is polyethylene. Included in this
segment are microZOTE foams made using polyolefin resins.
· High-Performance Products ('HPP'): these foams exhibit high-performance
on certain key properties, such as improved chemical, flammability or
temperature performance, due to the resins on which they are based. Turnover
in the segment is currently mainly derived from our ZOTEK F foams and T-Tubes
insulation both made from PVDF fluoropolymer. Other products either
commercially launched or being assessed in development include foams made from
polyamide (nylon) and Pebax from Arkema.
· MuCell Extrusion LLC ('MEL'): licenses microcellular foam technology
and sells related machinery.
Polyolefins HPP MEL Eliminations Consolidated
2014 2013 2014 2013 2014 2013 2014 2013 2014 2013
Restated Restated Restated Restated
£000 £000 £000 £000 £000 £000 £000 £000 £000 £000
Total Revenue 40,440 38,825 6,614 4,311 2,088 1,562 (61) (64) 49,081 44,634
Segment profit/(loss) pre-amortisation 6,008 5,798 1,022 269 (103) (138) - - 6,927 5,929
Amortisation of acquired intangible assets (21) - - - (304) (320) - - (325) (320)
Segment profit/(loss) 5,987 5,798 1,022 269 (407) (458) - - 6,602 5,609
Foreign exchange gains/(losses) - - - - - - - - 310 (334)
Unallocated central costs - - - - - - - - (1,341) (1,111)
Operating profit - - - - - - - - 5,571 4,164
Net financing costs - - - - - - - - (233) (308)
Share of loss from joint- ventures - - - - - - - - (64) -
Taxation - - - - - - - - (926) (695)
Profit for the year (pre exceptional items) 4,348 3,161
Segment Assets 48,214 41,794 7,955 5,402 6,526 6,020 - - 62,695 53,216
Unallocated assets - - - - - - - - 676 477
Total assets 63,371 53,693
Segment liabilities (14,257) (11,639) (210) (998) (587) (272) - - (15,054) (12,909)
Unallocated liabilities - - - - - - - - (1,083) (1,770)
Total liabilities (16,137) (14,679)
Depreciation and impairment 4,155 3,114 151 138 38 37 - - 4,344 3,289
Amortisation 21 - - - 304 320 - - 325 320
Capital expenditure:
Tangible fixed assets 5,488 4,655 129 107 94 35 - - 5,711 4,797
Intangible fixed assets 1,577 - - - 29 71 - - 1,606 71
Unallocated assets and liabilities are made up of corporation tax and deferred
tax assets and liabilities and investments in joint-ventures.
Previously the HPP business result included direct costs and an allocation of
R&D and manufacturing overhead but not a share of indirect administration
costs. As the HPP business has grown significantly in the period the result
has been restated to better reflect HPP's use of indirect resource. For 2013
the HPP segment profit has been restated to £0.27m (previously reported
£0.42m). Central plc costs have also been excluded from the business segments
as these are non-business specific. In 2014 central costs were £1.34m (2013:
£1.11m).
Geographical segments
Polyolefins, HPP and MEL are managed on a worldwide basis but operate from UK
and US locations. In presenting information on the basis of geographical
segments, segmental revenue is based on the geographical location of
customers. Segment assets are based on the geographical location of assets.
United Rest of the
Kingdom Europe North America world Total
£000 £000 £000 £000 £000
For the year ended 31 December 2014
Revenue from external customers 10,465 20,381 14,277 3,958 49,081
Non-current assets 26,647 - 8,939 - 35,586
Capital expenditure 4,625 - 1,086 - 5,711
For the year ended 31 December 2013
Revenue from external customers 9,479 18,680 12,569 3,906 44,634
Non-current assets 24,166 - 8,083 - 32,249
Capital expenditure 4,045 - 96 - 4,141
Non-current assets do not include financial instruments, deferred tax assets
or post-employment assets.
Major customer
Revenues from one customer of the Group represents approximately £5,127,000
(2013: £4,453,000) of the Group's total revenues.
3. Exceptional Item
On 27 June 2014 the Company made the decision to curtail manufacturing
activity on its microZOTE extrusion line within its Polyolefin business
segment. This has resulted in a non-cash impairment charge as follows:
2014£000 2013£000
Fixed asset impairment 1,175 -
Inventory impairment 90 -
1,265 -
4. Finance income and costs
Financial income
2014 2013
£000 £000
Interest on bank deposits 2 7
Finance costs
2014 2013
£000 £000
On bank loans and overdrafts 57 21
Interest on defined benefit pension obligation 178 294
235 315
5. Taxation
2014 2013
Note £000 £000
UK corporation tax 859 776
Overseas taxation 44 6
Adjustment to prior year UK tax charge (154) (64)
Current taxation 749 718
Deferred taxation 19 (76) (23)
Total tax charge 673 695
Factors affecting the tax charge
The tax charge for the year is lower (2013: lower) than the standard rate of
corporation tax in the UK of 21.5 % (2013: 23.25%). The differences are
explained below:
2014 2013
£000 £000
Tax reconciliation
Profit before tax 4,009 3,856
Tax at 21.5% (2013: 23.25%) 862 897
Effects of:
Research and development tax credits and other allowances less expenses not deductible for tax purposes (61) (41)
Overseas earnings and effect of US tax losses 26 (16)
Change in deferred tax rate to 20% - (81)
Adjustments to prior year UK corporation tax charge (154) (64)
Total tax charge 673 695
6. Dividends and earnings per share
2014 2013
£000 £000
Final dividend prior year of 3.60p (2012: 3.50p) net per 5.0p ordinary share 1,421 1,378
Interim dividend of 1.75p (2013: 1.7p) net per 5.0p ordinary share 691 670
Dividends paid during the year 2,112 2,048
The proposed final dividend for the year ended 31 December 2014 of 3.70p per
share (2013: 3.60p) is subject to approval by shareholders at the AGM and has
not been recognised as a liability in these financial statements. The proposed
dividend would amount to £1,621,000 if paid to all the shares in issue.
Earnings per ordinary share
Earnings per ordinary share is calculated by dividing profit after tax
attributable to equity holders of the Parent Company of £3,336,000 (2013:
£3,161,000) by the weighted average number of shares in issue during the year
excluding own shares held by employee trusts which are administered by
independent trustees. The number of shares held in the trust at 31 December
2014 was 340,611 (2013: 418,750). Distribution of shares from the trust is at
the discretion of the trustees. Diluted earnings per ordinary share adjusts
for the potential dilutive effect of share option schemes in accordance with
IAS 33.
2014 2013
Average number of ordinary shares issued 40,664,440 39,330,596
Deemed issued for no consideration 599,430 515,843
Diluted number of ordinary shares issued 41,263,870 39,846,439
7. Employee benefits
Defined benefit pension plans
The Company operates a UK registered trust based pension scheme that provides
defined benefits. Pension benefits are linked to the members' final
pensionable salaries and service at their retirement (or date of leaving if
earlier). The Trustees are responsible for running the Scheme in accordance
with the Scheme's Trust Deed and Rules, which sets out their powers. The
Trustees of the Scheme are required to act in the best interests of the
beneficiaries of the Scheme. There is a requirement that one-third of the
Trustees are nominated by the members of the Scheme.
There are two categories of pension scheme members:
· Deferred members: former and current employees of the Company
· Pensioner members: in receipt of pension.
The defined benefit obligation is valued by projecting the best estimate of
future benefit outgo (allowing for revaluation to retirement for deferred
members and annual pension increases for all members) and then discounting to
the balance sheet date. The majority of benefits receive increases linked to
inflation (subject to a cap of no more than 5% pa). The valuation method is
known as the Projected Unit Method. The approximate overall duration of the
Scheme's defined benefit obligation as at 31 December 2014 was 20 years.
Since 1 October 2001 the Scheme has been closed to new members and from 31
December 2005 future accrual of benefits for existing members of the Scheme
ceased.
Future funding obligation
The last actuarial valuation of the Scheme was performed by the Actuary for
the Trustees as at 5 April 2011. The Company agreed to pay annual
contributions of £504,000 per annum over the period to 30 September 2013
towards paying off the deficit. The Company also agreed to pay £156,000 per
annum to meet the Scheme's expenses, PPF levy and death in service premiums.
Due to the deterioration in funding, the Company has continued to pay
contributions at this level until the results of the 5 April 2014 triennial
actuarial valuation are finalised and a new recovery plan has been agreed with
the Trustees.
Risks
Through the scheme, the Company is exposed to a number of risks:
· Asset volatility: the Scheme's defined benefit obligation is calculated
using a discount rate with reference to corporate bond yields, however the
Scheme invests significantly in equities. These assets are expected to
outperform corporate bonds in the long term, but provide volatility risk in
the short term.
· Changes in bond yields: a decrease in corporate bond yields would
increase the Scheme's defined benefit obligation, however this would be
partially offset by an increase in the value of the Scheme's bond holdings.
· Inflation risk: a significant proportion of the Scheme's defined
benefit obligation is linked to inflation, therefore higher inflation will
result in a higher defined benefit obligation (subject to the appropriate caps
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